Answers

ACCA Certified Accounting Technician Examination – Paper T4

Accounting for Costs December 2008 Answers

Section A

1 C
2 D
3 C
4 D
5 A
6 B
7 B
8 B
9 A
10 D
11 A
12 B
13 A
14 C
15 C
16 D
17 D
18 A
19 C
20 A

Workings for calculation MCQs:

7 (22,800 x 23/24) + 14,640

9 (6,200 x 0·8) – 380

10 (2 x 40 x 12,000) ÷ 4002

12 20,290/560

13 (3·0 x 10·60) + (1·3 x 36·20)

16 179,070/7,800

19 24 – (180,000/20,000)

20 15/60

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Section B

1 (a) Net cash flows:

Year 0 ($280,000) = ($280,000)
Year 1 12,000 units x ($15 – $9) per unit = $72,000
Year 2 12,000 units x ($16 – $9) per unit = $84,000
Years 3–5 15,000 units x ($16 – $9) per unit = $105,000 per annum

(b) Net present value (NPV):

Year(s) Cash flow Discount factor NPV
$000 14% $000
0 (280) 1·000 (280)
1 72 0·877 63
2 84 0·769 65
3–5 105 1·786 188
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36
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(c) The internal rate of return is above 14% because the NPV is positive when discounted at 14%.

2 (a) Current situation per period:

(i) Profit = Contribution $7,140 [85 repairs x ($210 – $126) per repair] less fixed costs $6,972
= $168
(ii) Break-even sales revenue = Fixed costs ÷ C/S ratio
= $6,972 ÷ 84/210
= $17,430

(b) Extended working hours: required number of repairs per period

= Required contribution $7,896 ($7,728 + $168) ÷ contribution per repair $84
= 94 repairs

3 (a) Equivalent units of production:

Materials Conversion costs
Completed output 23,100 23,100
Closing WIP 3,000 1,800 (3,000 x 0·6)
––––––– –––––––
26,100* 24,900
––––––– –––––––
* 29,000 kg input x 0·9. Therefore, completed output = 26,100 – 3,000.
Cost per kg:
$
Materials 6·22 ($162,342 ÷ 26,100)
Conversion costs 3·00 ($74,700 ÷ 24,900)
––––––
Total cost $9·22
––––––

(b) Process account:

kg $ kg $
Materials 29,000 162,342 Output 23,100 212,982
Conversion costs 74,700 Normal loss 2,900 –
Closing WIP 3,000 24,060
––––––– –––––––– ––––––– ––––––––
29,000 237,042 29,000 237,042
––––––– –––––––– ––––––– ––––––––
Workings:
Output 23,100 kg x $9·22 = $212,982
Closing WIP 3,000 kg x $6·22 = $18,660
1,800 kg x $3·00 = 5,400
––––––––
$24,060
––––––––

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4 (a) (i) Time sheets are completed by individual employees. Each employee, on his/her time sheet, will record the time spent
on each of various tasks/jobs. Time sheets are used to calculate pay or to charge for work done.
(ii) A job card is prepared for each job. When an employee works on a job he/she records the time spent on that job’s card.
The card shows how long various employees spend on a particular job and at what cost. Job cards also carry instructions
to the operator on how the job is to be carried out.

(b) (i) Wages paid:

Direct personnel $ Indirect personnel $
Normal hours 8 x 38 = 304 at $10 = 3,040 3 x 38 = 114 at $7 = 798
Overtime hours 328 – 304 = 24 at $13 = 312 122 – 114 = 8 at $9·10 = 72·80
––––––– ––––––––
$3,352 $870·80
––––––– ––––––––
(ii) Wages charged:
Direct charge (to WIP) Indirect charge (to prod o’hd) $
Direct personnel 310 hours at $10 = $3,100 Idle time 18 hours at $10 = 180
–––––––
O’time premium 24 hours at $3 = 72
––––––––
252
Indirect personnel 870·80
––––––––––
$1,122·80
––––––––––

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ACCA Certified Accounting Technician Examination – Paper T4
Accounting for Costs December 2008 Marking Scheme

Section A
2 marks each question 40
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Section B
1 (a) Non-inclusion of depreciation 2
Non-inclusion of market research 2
Year 0 1
Years 1–5 3 8
––––

(b) Year 0 1
Years 1–5 31/2
NPV 11/2 6
––––

(c) Conclusion 2
–––
16
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2 (a) (i) Contribution 2

Profit 1 3
––––
(ii) Break-even formula 1
Sales value 3 4
––––

(b) Number of repairs 4

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11
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3 (a) Completed output 2

Closing WIP 2
Cost per kg 2 6
––––

(b) Output 11/2

Closing WIP 3
Debit entries 11/2
Credit entries 3 9
–––– –––
15
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4 (a) (i) Time sheets 3

(ii) Job cards 3

(b) (i) Direct personnel – normal hours 11/2

– overtime hours 11/2
Indirect personnel – normal hours 11/2
– overtime hours 11/2 6
––––
(ii) Direct charge 11/2
Indirect charge – direct personnel 3
– indirect personnel 11/2 6
–––– –––
18
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